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Wednesday, 6 April 2016

Top 10 student money tips

Getting a degree is expensive, but making every penny count lets you squeeze every drop of fun from your uni days without getting saddled with debt. Here are the top 10 essential money tips for students.

1. Work out a budget
It is hard to set a precise weekly budget before you get to university and see what things really cost. However, trying to work out an outline budget before you go is still a good idea – even a rough idea of how much money you will have available each week will help you to avoid blowing your budget early.

The simplest way to do this is to make one list of all your monthly income (e.g. from loans, part-time work, the Bank of Mum and Dad) and another listing all the expenses you can think of.

Remember, the more accurate you can be when predicting expenses, the clearer the picture of your money situation will be – include everything from rent, bills and food, to things like books, library fees, transport costs and laundry. Once you have both lists done, subtracting your total weekly or monthly expenses from your total income over the same period will give you an idea of how much is left over for entertainment.

2. Get the right bank account
Your choice of bank account, and particularly your overdraft facility, is very important. Before you choose, work out what features are important to you – paying particular attention to monthly fees, overdraft charges and such. Over the long term, they will be much more important than the gifts and incentives that many student accounts offer. The main things to look for in a student account are:

overdraft facility and fees: Find out how much you can borrow and how much will it cost each month. Some charge a monthly fee for using an overdraft, whilst others will charge interest on the debt and some will even offer you an overdraft that is interest free while you are a student (although you will be charged interest later on when you graduate). Which works for you depends on how much you are likely to go overdrawn each month.

interest paid on balances: Every penny counts, so look for an account that pays interest on your money when you are in credit.

monthly fees: Some accounts charge a monthly 'administration fee'. Generally these are best avoided as they will add to your monthly outgoings. The only exception is if they are offering you a service or benefit that you would pay significantly more for otherwise.

other charges: Check terms and conditions before you sign up, to identify any other potential costs – for instance find out how you will be charged if you go over your overdraft limit (although this is something that you should try and avoid if at all possible).

access to your money: It is a good idea to make sure you choose a bank with either a branch or a cashpoint near where you will be living. This way you will be able to withdraw funds without extra charges and have someone to speak to face-to-face if you need some money advice.

3. If you must get a credit card, get the right one
If at all possible, you should try to avoid relying on credit cards, since even a small debt can add up, with minimum repayments rising as interest is added over time. However, a credit card can provide a useful safety net if you choose wisely, only use it in dire emergencies and then pay it off in full as soon as possible. Even so, it is very important to shop around for the best deal, looking particularly at things like:

interest rates: When it comes to credit cards it is a case of the lower the interest rate the better. Remember that any interest charged on your outstanding balance will mount up quickly, getting you further in debt over time. Do make sure that you do not get caught out by introductory offers that hike the cost of your borrowing considerably after a number of months.

added extras: Do not be seduced by free gifts and incentives, focus on the overall cost of the card just in case you need to use it.

credit limits: Most student credit cards offer limits of up to £500, this can help you to taper your spending somewhat although it is still a significant amount to owe.

Finally, if you do spend on a credit card it is essential that you make the minimum repayment on time each month at the very least, otherwise you will be setting yourself up for financial disaster after you graduate.

4. Spend your money wisely
With these basics in place, you are in a good position to manage your student finances effectively. But it is no good planning your finances if you then spend money hand over fist once you get to university. Try to stick to the budgets you set out by shopping around for bargains and saving money on 'essentials' wherever you can. Consider:

buying second hand books: You can often find course texts for sale at knock down prices at the university union or by searching student notice boards.

applying for and use a 'Student Railcard': The 16-25 Railcard costs £30 and offers one third off rail travel for one year. You can apply by visiting www.16-25railcard.co.uk.

learning to cook: You will save a lot of money if you can cook yourself a few basic meals, rather than relying on ready meals and takeaways.

clubbing together to save money on food: If you live in shared accommodation, club together with your housemates when buying food. Go for value brands and look for 'bulk bargains' like three for two and BOGOFs (Buy one, get one free).

Manage your bills: By applying a little common sense you can save money on your monthly bills:
Switch off lights when they are not needed.

Do not leave TVs on standby, and unplug mobile chargers when they are not in use.

Do not use your mobile for overseas calls

Do not pay Council Tax if you are exempt, which you will be if you live in university accommodation, or if everyone in your private accommodation is a student.

Club together to pay for the TV licence, you only need one to cover everyone living in your accommodation, not one each.

5. Shop around for broadband deals
If you plan to live in private accommodation, the chances are you will have to get broadband set up. If so, shop around to get the best deal available in your area. When comparing deals, look at:

Download speed: The faster the better, but not at any cost

Download limits: Most deals will set a limit on how much data you can download each month. Check that this is going to be enough and find out what happens if you exceed this limit or you could end up paying more than you expected.

Cost: You will need to compare monthly and setup costs so you know exactly how much you will be paying to get online.

6. Be smart about part-time jobs
Many students rely on part-time jobs to cover monthly bills and to pay for nights out and socialising. If you get a job, remember:

don't overdo it: Try not to work more than 15 hours per week so you can keep up with your studies.

get paid what you are owed: The minimum wage for 18-20 year olds is £5.30 per hour. If you are over 21 it is £6.70.

7. Look after your finances
It is vital that you keep a regular eye on your finances – do not just assume that everything is OK.

Review your bank account regularly: This way you will always know how much money you have. You will be better able to avoid unwanted bank charges (e.g. unauthorised overdraft fees) and will be less likely to run out of cash altogether.

Plan for regular bills: Ideally, you should set up direct debits for everything from rent to utility bills. That way you will know exactly how much you spend on each and when the money will leave your account. It can be useful to have a separate 'bills' account so you never accidently spend cash that was needed for essentials.

Sign up for online banking: This will enable you to check your balance, and which direct debits have already been paid, whenever you want.

Don’t let problems mount up: If it looks like you are running out of money, or cannot cover your bills, get help straight away. Talk to your bank and to a student adviser (through the National Union of Students) to see what help might be available

8. Make more from your student loan
If you are taking out a student 'maintenance' loan to cover living costs, you will be paid a lump sum at the beginning of each term. When you receive each payment, put it in an instant access savings account (keeping enough back to cover your immediate needs). That way, your loan will earn interest and you will be less tempted to blow it all straight away (and won't be able to spend it 'by mistake'). If you plan to do this, shop around for a savings account.

If you have not used your annual ISA allowance, use it as you will not pay tax on your interest.

Make sure you will be able to access your money, without penalty, when you need it. Read the terms and conditions before you commit yourself.

9. Protect your identity
Online banking fraud is on the increase, so take steps to protect yourself. Take the time to find out what the threats are and how to avoid getting caught out.

Remember that bank and identity fraud does not just happen online. Particularly if you live in shared accommodation, be careful that you do not leave items such a bank statements and bills lying around.

Do not throw bank statements in the bin. Either keep them somewhere safe, have them sent to your home address or shred them before you throw them away.

10. Protect your possessions
Finally, make sure your possessions are covered by adequate home contents insurance. This is a must as both halls of residence and student housing tends to be incredibly popular with thieves.

You do not need buildings insurance (this is the responsibility of your university or private landlord).

Make sure your cover is sufficient to protect all your possessions.

Shop around and get quotes from a number of providers so that you don't pay more than you have to for the cover you need.

Pay attention to the terms and conditions, to make sure you are protected.

Make sure any valuable items, like computers and bikes, are properly covered. Some policies have a 'single item' limit (which means that any single item is only covered up to a maximum of say £2,500) and insist that any such items are listed on the policy.

Be honest when you apply. If you do not tell the whole truth your insurer may refuse to pay out if the worst happens.

Opt for a policy excess you could afford if you have to claim. The excess is a set amount of any claim you have to pay yourself before the insurer will contribute (the first £50 for instance). Having a larger excess will bring down your premiums, but will cost you more if you need to make a claim.